GBP/USD could still revisit 1.2900 as long as it keeps the trade above the 1.2700 yardstick, suggest UOB Group’s Markets Strategist Quek Ser Leang and Senior Economist Alvin Liew.

Key Quotes

24-hour view: Yesterday, we expected GBP to trade in a range between 1.2765 and 1.2830. We did not expect the sharp drop in GBP to 1.2714 and the rapid rebound from the low. The rebound has room to extend but any advance is expected to face solid resistance at 1.2805. Support is at 1.2735, followed by 1.2700. 

Next 1-3 weeks: We turned positive in GBP on 09 Jun, when it was trading at 1.2555. Our view was not wrong, and after GBP rose, in our latest narrative from last Friday (16 Jun, spot at 1.2780), we indicated that “GBP strength is still intact.” We added, “the next level to watch is 1.2900”. Yesterday (20 Jun), GBP fell to a low of 1.2714. While our ‘strong support’ level at 1.2700 has not been breached yet, upward momentum is beginning to fade. However, as long as GBP does not break below 1.2700, there is a chance, albeit a slim one, for GBP to rise further to 1.2900.